The U.S. government has filed a historic anti-trust lawsuit against tech giant Apple, over alleged market monopoly and unfair competitive tactics.
Apple vs America
An anti-trust lawsuit has been filed against Apple on behalf of the U.S. Department of Justice, setting up what looks to be a formidable legal battle between the U.S. government and the world’s foremost tech company.
Lawsuit Filed
The lawsuit has accused Apple of engineering a market monopoly on smartphones that crushes competitors, locks in developers and customers, and stunts technological innovation.
In 16 States
Filed in New Jersey and with 16 state attorney generals, the lawsuit alleged that the multinational corporation had used its iron grip on the iPhone app store to “engage in a broad, sustained, and illegal course of conduct.”
Potential for Big Changes
If effective, the landmark lawsuit could force the company to change language and clauses in its contracts with consumers and developers, specifically those that allow it to “obtain, maintain, extend or entrench a monopoly.”
Apple Denied the Claims
Apple representatives have strongly denied the lawsuit’s claims, calling it “wrong on the facts and the law” and vowing to “vigorously defend against it.”
Series of Allegations
A number of allegations have been made around the “shapeshifting rules”, regulations, hardware, and software that Apple uses in its products to boost its own profits and cut down the competition.
Strategic App Reviews
Examples include using its app-store review process to divert attention from ‘super-apps’ and streaming apps that might lead Apple customers away from their services, despite these apps having few alternatives outside of the Apple store to sell their products.
Steering Customers Away
It also makes it more difficult for customers to use these competing services and products, particularly messaging apps and smartwatches, on Apple devices.
Many Complaints From Competitors
A number of significant apps like Tile and streaming companies like Spotify have launched complaints about the unfair tactics Apple has used to corner the market and ensure that competitors cannot profit too much through Apple.
Contactless Payments Too
Officials have also claimed that Apple has blocked contactless payment technology from other companies on its devices.
Apple Pay for Apple Users
This means that Apple users must use Apple Pay in order to connect their credit card to their phone and smartphone to use contactless payment options.
“Violating Federal Anti-Trust Laws”
“Apple has maintained monopoly power in the smartphone market not simply by staying ahead of the competition on the merits but by violating federal anti-trust law,” said Attorney General Merrick Garland at a press conference concerning the case.
Five Areas
All in all, there are five areas where it is believed that Apple is abusing its power and even breaking the law.
“Customers should not have to pay higher prices because companies break the law,” Garland continued.
Industry Experts Weight In
Some industry experts agree with the government’s assertions.
Case Western Reserve University business law professor Anat Alon-Beck asserted that “Apple systematically excludes rivals from the Apple ecosystem. By doing that, Apple is hurting so many startup businesses, stakeholders, customers, and, in my opinion, its shareholders.”
Customers Are Satisfied
But Apple has insisted that its loyal user base was the result of customer satisfaction, not unfair practices, and that the rules and regulations that the government has taken issue with are there for legitimate security reasons.
Hindering Innovation?
They plan to request that the lawsuit be dismissed, on the grounds that successful legal action would “hinder our ability to create the kind of technology people expect from Apple — where hardware, software, and services intersect.”
“A Dangerous Precedent”
The company even implied democratic issues, stating that the case could “set a dangerous precedent, empowering government to take a heavy hand in designing people’s technology”.
Years Ahead
The case will likely take years to conclude, and even longer to enact any changes to Apple’s contracts and practices if the courts rule in the government’s favor.
Third Legal Case
This is the third instance of legal action taken against Apple by the U.S. government, and the first under the Biden administration.
Issues Across the World
However, the U.S. is far from the only country to launch investigations into Apple business practices – the company has also faced anti-trust investigations in Japan, Korea, and Europe.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.
